Employment and Earnings of Milwaukee County Single Parent AFDC Families: Establishing Benchmarks for Measuring Employment Outcomes Under "W-2"

by John Pawasarat,
University of Wisconsin-Milwaukee Employment and Training Institute,
December 1997

This report tracks the earnings and employment experience for all 25,125 single parents
receiving AFDC in Milwaukee County in December 1995 who are expected to work under the
"W-2" new state welfare initiative. The Wisconsin Department of Workforce Development
(DWD) matched all quarterly wages paid from January 1996 through March 1997 by Wisconsin
employers with the AFDC population in Milwaukee County. The University of Wisconsin-
Milwaukee Employment and Training Institute then analyzed employment patterns, jobs held and
earnings for each single parent in the study population. Additionally, the AFDC and public
assistance status of each AFDC case was examined for December 1995, September 1996 and
December 1996.

State DWD wage employer records showed employment and earnings for 18,126 of the 25,125
parents at some time from January 1996 through March 1997. In all 42,120 jobs were held by
employed parents during the five quarters examined. Earnings were tracked for all single
parents remaining on AFDC and also for parents leaving AFDC. These employment outcomes
offer a first look at the experience of AFDC recipients and provide baseline data on the
characteristics of the AFDC population leaving public assistance prior to implementation of "W-
2." The study introduces a methodology for providing timely data on "W-2" outcomes using
measures of employment and earnings. A companion study examines the jobs held by AFDC
recipients from the employer
perspective.

MEASURING THE OUTCOMES OF WELFARE REFORM

Evaluations of welfare reform experiments are typically released four or more years after
initiatives begin. Program operators and policy makers need more timely information to assess
program performance and to improve services. This report provides a model for measuring
outcomes using State of Wisconsin DWD wage data currently available. Under this model,
quarterly outcome reports could be provided in an inexpensive and timely manner utilizing
existing institutional data. The following analyses related casehead earnings to levels of
employment success.

Employment Earnings of Cases Leaving AFDC in September 1996

A total of 7,502 single parent cases receiving AFDC in December 1995 were no longer
on AFDC in September 1996. In order to measure the status of single parents leaving AFDC
or W-2, the earnings of these parents were related to five levels of employment related
outcomes. Only 16 percent of single parents leaving AFDC showed earnings above the poverty
level while 34 percent showed no earnings in Fourth Quarter (October-December) 1996.

Single parents off AFDC in September 1996 showed the following employment earnings in
Fourth Quarter (October-December) 1996:

LEVEL ONE: 6.6 percent (493 single parents) had quarterly earnings at or above $5,000
in Fourth Quarter 1996. Most of these parents continued to earn wages above the poverty level
for a family of four ($4,000 or above) in First Quarter 1997.

LEVEL TWO: 9.6
percent (721 single parents) had total earnings of $4,000-$4,999 in Fourth Quarter 1996. Less
than half of these parents continued to have earnings above the poverty level (at least $4,000)
in First Quarter 1997.

LEVEL THREE: 22.2 percent (1,664 single parents) had Fourth Quarter 1996 earnings
from $2,500 (at least full-time employment at minimum wage) to $3,999. Two-thirds of these
parents continued to work at the full-time minimum wage level or above in First Quarter 1997
but few (186) showed earnings above the poverty level.

LEVEL FOUR: 27.3 percent (2,050 single parents) had total earnings between $1 -
$2,499 in Fourth Quarter 1996. A fourth of these cases returned to AFDC by December 1996
and only 308 of these parents worked at the full-time minimum wage level or above in First
Quarter 1997.

LEVEL FIVE: 34.3 percent (2,574 single parents) had no earnings in Fourth Quarter
1996. Although most of these cases remained off AFDC in December 1996, only 322 of these
parents had any earnings in First Quarter 1997.

December 1996 Public Assistance Status of Cases Off AFDC in September 1996

Fifteen percent (1,153 cases) of the 7,502 cases that left AFDC in September
1996 had returned to AFDC by December 1996. Another 20 percent were on Food Stamps but
not AFDC, and 20 percent more remained on medical assistance only. In total, 55 percent
remained on some form of public assistance in December 1996.

Most single parents who were off AFDC in September but returned to AFDC by
December 1996 had less than 12 years of schooling, no work history during the 15 month period
(from January 1996 through March 1997), or no earnings above $1,250 in any quarter of the
study period.

Continuing Economic Well-Being of Families Leaving AFDC

Measures
were developed to determine continuing economic well-being of single parent families, using
sustained employment and case status off AFDC. Six subsequent months of employment data
(October 1996 through March 1997) were examined for the 7,502 cases off AFDC in September
1996.

While 16 percent of the cases off AFDC in September 1996 showed Fourth
Quarter 1996 earnings above the poverty level ($4,000), only 10 percent of cases remained off
AFDC in December 1996 and had sustained earnings above poverty ($4,000 or above) in both
Fourth Quarter 1996 and First Quarter 1997.

While 38 percent of the cases off AFDC in September 1996 showed full-time employment
(i.e., at least $2,500 earnings) in Fourth Quarter 1996, only 28 percent remained off AFDC in
December 1996 and showed earnings of at least $2,500 in both Fourth Quarter 1996 and First
Quarter 1997.

Single Parents Who Left AFDC with No Earnings in Quarter 4 1996

A third
(2,574) of the single parent cases who left AFDC in September 1996 had no employment
earnings during Fourth Quarter (October-December) 1996. Most of these cases remained off
AFDC in December 1996; only 18 percent returned to AFDC in December and an additional
11 percent received food stamps but no AFDC.

The 1,834 cases showing no earnings in Fourth Quarter 1996 and no AFDC or food stamps
payments in December 1996 were examined to identify their economic status and characteristics.

28 percent of the 1,834 cases appeared to have other sources of income. The
most common sources of unearned income were SSI for children (listed in 14 percent of cases)
and child support (listed in 9 percent of cases).

While the movement of families out of state could not be established, it appeared that out-
migration could be a factor for a portion of the 1,834 cases showing no Wisconsin earnings.
A much higher percent of the 1,834 cases without earnings, AFDC or food stamps were found
to be recent in-migrants; 33 percent had moved to Milwaukee after 1991 (compared to 13
percent of the total population). The in-migrant population was also much younger (38 percent
were under 25 years of age) and more likely to have no recent work experience (68 percent
posted no earnings in any of the five quarters).

Employment Patterns for Single Parent AFDC Cases from January 1996-March
1997

A total of 18,126 caseheads (72 percent of the single parent AFDC population)
held jobs at some point from January 1996 through March 1997. The number of AFDC single
parents working increased through 1996 with 10,056 employed at some time in First Quarter
1996, up to 13,884 employed in Fourth Quarter 1996, but then declined to 12,921 employed in
First Quarter 1997. These workers generated $114.6 million in earnings during the five
quarters.

Over half of single parents employed during the study were already working in
First Quarter 1996. These caseheads were typically better educated and had fewer younger
children. The employed population was the primary group targeted to move off AFDC during
1996 and made up a majority of the cases off AFDC in September 1996.

Despite
high overall employment rates, many parents failed to maintain their employment over the
quarters studied, with new entrants to the labor force showing high failure rates. Half of the
single parents entering the workforce after First Quarter 1996 were unemployed or only
marginally employed one year later with 33 percent not employed and 17 percent earning less
than $500 in First Quarter 1997. Even among the single parents already employed in First
Quarter 1996, 26 percent were no longer employed in First Quarter 1997 and another 10 percent
earned less than $500 in the quarter.

The percentage of single parents working at the full-time minimum wage level or above
($2,500 per quarter) rose from 9 percent in First Quarter 1996 to 20 percent in Fourth Quarter
1996.

Many single parents were only marginally employed and showed failed employment
episodes. On average 20 percent or more of employed caseheads per quarter earned less than
$500 in wages.

Only 1,509 cases (6 percent of the total single parent AFDC population) showed First
Quarter 1997 earnings at or above $4,000 (the poverty level for a family of four).

A primary employer was identified for each single parent with earnings based
on the job with the most earnings in the quarter. In Fourth Quarter 1996, 22 percent of
employed single parents worked for temp agencies, 26 percent for health, education and social
service agencies, 25 percent in retail and wholesale trade, and 22 percent for hotel, auto,
business and personal services firms.

An expectation of 1996 welfare initiatives was that parents would leave AFDC and have
full-time employment. Three-fourths of the 3,503 single parents who left AFDC by December
1996 and had earnings of at least $2,500 (full-time equivalent wages) in First Quarter 1997 were
already employed one year earlier. These parents were older, better educated, and had fewer
children. By contrast, only 45 percent of the 15,145 single parents remaining on AFDC had 12
or more years of schooling and 41 percent had 3 or more children.